Games businesses face rising cost pressures as economy flat lines

TIGA, the trade association representing theUK games industry, today published its Business
Opinion Survey (Spring 2011). The Report, based on a survey of 104 games
businesses (mainly independent developers) showed that a majority of games
businesses expect to increase employment over the next six months. However, many
businesses in the sector face rising cost pressures but are not able to pass on
the costs in price rises. Access to bank finance does not appear to have
improved dramatically for most businesses. The survey takes place against a
backdrop of an economy in which growth has broadly flat lined over the last six
months (the economy contracted by 0.5 per cent in the last quarter of 2010
before growing by 0.5 per cent in the first quarter of 2011).

Some
of the key findings were:

• 59 per cent of respondents expect
  to grow their organisation’s workforce over the next six months, 35 per
  cent do not anticipate either growing or shrinking their workforce, while
  6 per cent expect their workforce will decline. Headcount in the UK video development industry
  has fallen by 9 per cent since 2008.

• 54 per cent of survey participants
  said that they were more optimistic about their business’s prospects in
  comparison to six months ago. 15 per cent were less optimistic, and almost
  a third felt the same as six months ago.

• 53 per cent of respondents expect
  their company’s costs to rise over the next six months, while only 4 per
  cent expect them to fall.

• 71 per cent in our survey do not
  expect to change the prices that they charge to their customers over the
  next six months. 13 per cent expected to increase prices and 14 per cent
  expected their prices would fall.

• Over two fifths of respondents said
  that there was no difference in their business’s ability to borrow from
  the bank when compared to six months ago, but 14 per cent said that it was
  now more difficult.

Dr. Richard Wilson, TIGA CEO, stated:

“Despite
the UK’s disappointing economic growth performance over the last six months, TIGA’s
latest Business Opinion Survey shows
that there are tentative signs of optimism in the UK games industry. A majority
of survey participants expect to increase employment in their businesses over
the next six months. With the right support from the Government, the UK games
industry has the potential to create more highly skilled jobs in the future. Estimates
from PWC suggest that the global market for video games will grow from $52.5
billion in 2009 to $86.8 billion in 2014.[1]

“At
present, our key competitors including Canada, France and the USA benefit from
tax breaks for games production at a national or state level. The UK does not.
This leaves us at a disadvantage when competing for inward investment. The UK
games industry is much more likely to seize a larger share of the market for
video games if we can compete on a level playing field. The Government should
support the industries of the future such as games development.

“Our
industry is export oriented, R&D intensive, provides high skilled
employment and is low carbon in output. The introduction of Games Tax Relief
would power our sector forward, creating many more high quality jobs in the
process.””

Jason Kingsley, TIGA Chairman
and CEO and Creative Director of Rebellion, added:

“The
latest TIGA Business Opinion Survey
shows that the video games industry has the potential to create more highly
skilled jobs. To exploit this potential, the UK should not only introduce Games
Tax Relief, but should also continue to reform the small firms R&D tax
credit. TIGA research shows that expanding the scope of the R&D tax credit
to enable businesses to claim for the costs of IP protection, design and
premises costs will encourage games businesses to invest in more R&D and
expand their workforce.””

-Ends-

Notes to Editors:

1) Over 5 years, TIGA research shows that Games Tax
Relief would create or safeguard 9,519 direct and indirect jobs (including
3,366 jobs in the games industry), £431 million investment in development
expenditure and £394 million in tax receipts to HM Treasury. It would cost just
£194 million in tax relief to HM Treasury.

About TIGA:

TIGA
is the trade association representing the UK’s games industry.The
majority of our members are either independent games developers or in-house
publisher owned developers.We also have games publishers, outsourcing
companies, technology businesses and universities amongst our membership. TIGA
was awarded ‘Trade Association of the Year’ and the ‘Member Recruitment Award’
at the Trade Association Forum Best Practice Awards 2010. TIGA has also been
named as a finalist in the 2010 Chartered Management Institute (CMI) National
Management and Leadership Awards in the category of ‘The Outstanding Organisation
of the Year Award (SME)’. TIGA is an Investors in People organisation.

TIGA’s
vision is to make the UK the best place in the world to do games
business. We focus on three sets of activities: political representation,
generating media coverage and developing services that enhance the
competitiveness of our members. This means that TIGA members are
effectively represented in the corridors of power, their voice is heard in the
media and they receive benefits that make a material difference to their
businesses, including a reduction in costs and improved commercial
opportunities.

For
further information, please contact Dr Richard Wilson, TIGA CEO on 07875939643:
or email richard.wilson@tiga.org; or contact David Hodges on 02070911653

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